True or False:
1. The perfectly competitive model does not assume any knowledge on the part of individual buyers and sellers about market demand and supply—they only have to know the price of the good they sell.
2. In a perfectly competitive market, marginal revenue is constant and equal to the market price.
3. For a perfectly competitive firm, as long as the price derived from expanded output exceeds the marginal cost of that output, the expansion of output creates additional profits.
4. Producing at the profit-maximizing output level means that a firm is actually earning economic profits.
5. A competitive firm earning zero economic profits will be unable to continue in operation over time.
6. A firm will not produce at all unless the price is greater than its average variable costs.
7. A perfectly competitive firm will operate in the short run only at price levels greater than or equal to average total costs.
8. The MC curve above minimum AVC shows the marginal cost of producing any given output, as well as the equilibrium output that the firm will supply at various prices in the short run.